Friday, July 29, 2016

France in zero growth in the second quarter – Les Echos

Bad surprise on the growth front. According to figures released Friday by INSEE, GDP stagnated in the second quarter. And although public statisticians have revised upwards the results of the first three months of the year (0.7% against 0.6% previously announced), these results tarnish the “feeling better” of President François Hollande and were taken aback analysts who had forecast rather an increase of around 0.3%.

Just after the publication of these results, the finance minister Michel Sapin has fact acknowledged in a statement that this growth figure was “disappointing”. But “beyond the jolts from one quarter to the next, the French economy remains on a recovery momentum that does not affect the 1.5% growth forecast in 2016,” says t -he.

in fact, without falling into complacency, these results should not forget that the growth overhang at the end of the first half, that is, -dire level that GDP would reach if the activity remained sluggish until the end of December stood at 1.1. A recovery in activity, so would achieve the government’s objective with varying difficulty.

But many uncertainties continue to weigh on the coming months. Including those related to benefits of Brexit but also attacks that just hit the hexagon and may depress consumer confidence.

Consumption and investments worth

for now however, the detail, the results published on Friday show that the situation is far from encouraging. Most of the engines of the economy weakened and if the growth has not fallen into the red thanks to the contribution of foreign trade: it turned positive due to a decline in weaker exports than imports.

But for the other components of growth, the picture is less bright. “The expenses of household consumption slowed markedly both in regard to consumer goods than services. According to INSEE, the total consumption stagnated in the second quarter, a situation that contrasts with the 1.2% increase the previous three months.

side of the investment situation is hardly brighter. After three quarter of sharp increase, it flexes and returns in the red with a decline of 0.4%. The decline concerns both construction investment as manufactured prodduits or even that of market services.

Overall, total domestic demand “stagnant” in a context where external trade are not at their best form, although the contribution of foreign trade is positive